tv Nightly Business Report PBS April 30, 2015 1:00am-1:31am PDT
this is "nightly business " with tyler mathisen and sue herera. >> slowing to a crawl. economic growth stalled at the start of the year as businesses slashed investment and exports tumbled. insights from a former fed governor about wha. not yet. the federal reserve does not move on rates and left few clues about what might lie ahead. and your money. what should you do with your stocks and bonds now that the ? all that and more tonight on "nightly business " for good evening, everyone and welcome. anemic. that describes first quarter growth. and while many expected the economy to be weak they didn't expecte this weak. gross domestic product, the broadest measure of goods and
services produced across the economy, grew at just 0.2% a massive deceleration from the fourth quarter and much worse than expected. a downgrade of the assessment of the economy leaving more questions about when the central bank will raise rates. hampton pearson has more on the federal reserve statement, but we begin with steve liesman and the economy's slow start to the year. >> the first quarter's weaker than expected gdp has ignited a debate on wall street and at thee over whether the economy is slowing more seriously or just working through some temporary setbacks. severe winter weather in the east and port shutdowns in the west were the obvious temporary factors. but the negative effects of a stronger dollar and the decline in oil prices also played a role and no one knows how long they will continue to hurt the economy. what we do know is that it was another weak first quarter in a string of them. >> it's kind of a deja disaster
the same thing we saw last year. we came into the first release of gdp expecting growth of above 1% and it came in effectively at 0%. i do think that some of this is the normal volatility the numbers and it will -- we will get a bounceback. >> consumer spending nung there with a nearly 2% gain after an even stronger rise in the fourth quarter. while economists believe lower oil prices and more jobs had even higher consumer spending it was not the main source of weakness. the biggest drag came from exports which fell 7% and knocked a full percentage point off growth. the strong d could be playing a role making u.s. exports more expensive and hurting the overseas earnings of companies. slowdowns in the ports out west could have played a role keeping exports from leaving the country. another major area of weakness plunging investment in the oil and gas secr as a result of lower oil prices.
>> the minus 23 in structures is a big decline. about 15% will be related to cap ex-in the energy sector so the drop in q-1 is showing up there. we were tracking minus 11%, about twice as large of a drop. >> reporter: good news last year's sharp decline in the first quarter was followed by 5% growth in the second quarter. all wall street and economists can do now is wait and hope that gdp history repeats itself in 2015. for "nightly business report," i'm steve liesman. >> reporter: the federal r wrapped up a two-day meeting by issuing a policy statement downgrading its assessment of the economy, citing slow growth du winr months, a decline in consumer spending despite rising household incomes, softening business investment and job gains moderating. evidence some fed watchers say there's no sign that a rate hike is imminent. >> we want t rates, but they want to hike in the context of better data.
now they've seen two soft quarters in a row including a zero quarter. to dig out of that hole they need to see two solid numbers in a row. that means that september is the earliest they would go and they could wait longer. >> reporter: fed chair janet yellin and her fellow monet policymakers said most of the factors that contributed to the slowdown in the firstransitory. he expects the job market to rebound and inflation to move back to the fed's 2% target. some fed watchers say a june rate hike is not off the table if the economy rebounds in the second quarter. >> they're willing to look through that weakness. they think it's oil. they think it's the dollar and they think the economy is going to be stronger in the second and third quarter. >> the latest bottom line from the fed, depending on the economy, every future meeting of the fomc should be considered live when it comes to the possibility of an interest rate hike. for "nightly business report,n at
the federal reserve. randy crosner joins us now, professor of economics at the university of chicago's booth school of business and a frequent guest on "nbr." good to see you. do you see the economy the way chair yellin does and that is that the first quarter was beset by transitory and that the economy will bounce if not snap back and that inflation will soon be moving back towards 2%? >> so i don't think we're going to gety as much of a bounceback as we got got last year.k the economy will be coming back. we'll do better i think in the second and third quarters than we did in the first. but i don't see the same snapback because part of what happened in the first quarter is we didn't sell as much as we expected and so there's a lot more inventory, so probably businesses are going to produce a little bit less because they n down some of those inventory. >> randy, as you look at the fed statement and assess it what was the most significant either change or factor in today's
announcement? >> it was interesting how they characterize the slower economy as in part transitory. that left them complete flexibility because it said some of it's transitory so, don't think that the rate hikes are off the table. but it's only in part left open the possibility maybe some of these things could be lingering like headwinds coming f dollar d so we have to wait and see. >> so as you look at the statement there and you do the sort of linguistic analysis of it you see them really trying to leave it very open and maintain all of their flexibility so that they can move when they want to. but basically, isn't this a very accommodative federal reserve? >> well i think certainly with a $4.5 trillion balance sheet it's very accommodative. no doubt about that. but i think that the question is when are they going to start pulling the punch bowl away a little bit and i think there are a lot of different views around the table and so chair yellin
has to manage both the expectations in the markets about when they move but also satisfy the different members of the fomc some of who want to move very soon, probably wanted earlier, and other who is may not want to move until next year. >> when do you t that they should move or will move? >> well i think inflation pressures are really not there. we saw that in the core bristol consumption expenditure index, the price index from the gdp was less than 1% was 0.9%. that is probably the lowest that it's been since 2010. wage pressures are not there yet. we have these uncertainties in the economy. so my guess is it's going to be a while before they would feel comfortable to move probably toward the end of this year. but it's going to depend on the always. >> very briefly, why we need higher interest rates? typically when you raise interest rates because either inflation is getting too hot or the economy is getting too hot or both at the same time.
why do we need them now? >> the fed wants to try to not be behind the curve because the expectation is that at some point we'll start to see wage pressure, start to see price pressure. we haven't seen that yet. so the fed wants to make sure that it's ready, that inflation doesn't get out of control and the economy doesn't overheat but i think exactly as you said given where we are, i'm not sure that they're in a rush to raise rates. >> all right. randy, great as always to see you. thank you very much. with the university of chicago's booth school of business. as steve liesman reported a little bit earlier in the program, exports dropped sharply in the first quarter, even as a growing number of small businesses have started selling their goods overseas. and we veal more on that part of the story later in the broadcast. and to stocks now, which had a choppy session following the release of that federal reserve statement. the dow jones industrial aver was off as much as 156 points at one point during trading today. it closed 74 points lower at
18,035. the nasdaq off 31 points. it was off about 1% earlier in the day. and the s&p 500 fell about 8. as for the bond market yields whipsawed this afternoon, breaking back above 2% as you see there. >> joe duran joins us to discuss what you should do with your money now that we've heard from the fed. he is ceo of united capital, a financial life management firm with about $13 billion under management. welcome back. >> good to be back. >> that is the question what do you do with your money now that the fed has taken all the calendar issues out of the particular statement that we heard today? >> well the first thing you need to do is look at the overall risk of your portfolio. i think a lot of people have benefited less from the rising stock market and haven't looked at their overall r suggest we're sbrag period starting in may where we'll ha more uncertainty, a lot more whipsawing. so make sure to look at the overall risk to the existing
portfolio before you assess where to invest. >> it would seem to me a lot of people have benefitted from a rising bond market s and that some of the risk in the portfolio of many individuals might well be in bonds. do you agree or disagree? >> i completely agree. it's the area with the biggest risk that most people the average viewer and the average invest simply unaware of. they might go for an extra 1% in yield by buying a 30-year bond instead of a ten-year bond and be doubling or tripling their risk. so a 1% change in interest rate could be instead of an 8% decline a 20% or 22% decline. the risk right now in bonds is incredibly high. we tell everyone that's where the real problems lie potentially for the market. >> all right. so once you've assessed your risk or your exposure as the case may be what equity positions are you recommending right now? i see you're looking closelyse at europe. >> yeah. so what we see in the dollars actually that it's been
weakening quite a lot against the euro. and what we're seeing i think is the commodity market the currency markets telling you the fed is going to do nothing until much later in the year than originally expected and that means that you're going to have a lot more volatility so what we think is you want to invest in those markets that haven't participated as much -- europe emerging markets, and if we're going to have rising interest rates, you want to be in larger companies than smaller companies. so some names we think are interesting if you have taken care of the your portfolio. >> all right. we'll leave threat. thank you very much. joe duran with united capital. still ahead, want to find the lowest price online? it's a simple question with a comp collated answer, but courtney reagan's ♪
the securities & exchange has called for new rules on executive pay. the proposal would link compensation of top executives to a company's financial performance and require the disclosure of stock options and other ben if i wants. the proposal passed bay vote of 3-2. it was mandated by the 2010 dodd franks financial reform law. oil prices hit the highest level of the year today. inventories at the large oil storage facility in cushing, oklahoma saw its first stock drawdown in five months, and that sug to some the oil glut may be starting to ease. west texas intermediate crude
rose 2.5% to $58.50. the energy markets are also watching a shift in power in saudi arabia the world's top oil-producing country. the moves come at a time of almost unprecedented regional turmoil and could have far-reaching implications. >> reporter: the changes announced by 79-year-old king salman today follow a host of transformational moves that began in january when he succeeded king abdullah who died at the age of 90. saudi regime changes are watched closely in washington and on wall street to see how they affect both the politics and the business of an evolving saudi arabia not to mention the turbulent middle east. king salmon put his 55-year-old nephew prince mohamed bin nayef, next the line to become king. he's the first of his generation to move one step from the throne. king salman also moved his own son, 30-year-old mohamed bin salman up to second in line. bin salman is saudi arabia's
defense mipster and i already assuming a high-profile role in the military campaign that country has waged in yemen. he's also in charge of a key committee that oversees economic affairs. the most koch etted tricky time for saudi arabia and for u.s./audi relation, the sunni monarchy is keeping a close eye on its regional rival, shiite-run iran and the regime a longtime u.s. ally is weary of any american rapprochement with tehran. as for saudi arabia's critical industry oil, the royal shake-up left it largely untouched. longtime oil minister ali al nay nayimi kept his job, although replaced as chairman of the oil company by a well-known businessman. few think the changes will affect saudi oil production or the price of crude. >> oil is too important for the saudi economy in a very fundamental way for it to be,
you know a function of political games, and that's not going to change ref which individuals happen to be at the top at any given moment. >> reporter: oil aside, there are other issues at home that could destabilize the regime. employment for a you population nearly half of which is under 30 is one issue. maintaining stable relations with conservative clerics is another. and yet a third is how moving younger men up in the line of succession will play with hundreds of older princes who could well feel shoved aside. >> finally, the new king is being much more assertive and quicker to make decisions than his predecessors in reaction to global events. mastercard's profits rose double digits and that's where we begin tonight's "request market focus." more consumers swiped which helped the credit card company's bottom line but revenue missed estimates. the ceo says consumers are spending less on gas and more on paying down their debt. shares rose just a penny to
settle at $90.24. humana reported earnings today that fell below consensus. revenue did rise 18% as the insurer's membership continued to grow and it reaffirmed its full-year outlook. shares fell 7% to $168.05. anthem also posted mixed results. profits rose and topped estimates as medicaid enrollments were up but sales came in below the street's estimates. shares were off 2% just $151.07. and lumber liquidators reported a surprise first-quarter loss. this is the floor as the flooring retailer faces possib crimina charge fls the department of justice centering on imports from china that allegedly contain a high every level of formaldehyde a known carcinogen. shares plummeted 26%. starwood hotels may be looking to sell itself. they hired an advisory firm saying no option was off the table. separately, the company beat on
both the top and bottom lines in the latest quarter, shares up 8% today to $87.52. meantime salesforce.com is also apparently a possible takeover target that according to a report from bloomberg with a market value of almost $49 billion. there are only a few internet and software compani that are larger than this cloud computing firm. shares spiked on the report up 11%. the $74.65. shares of twitter still tumbling after last night's disappointing report. today crowey the ceo reacted saying new products should help twitter in the near future. >> a slight mison revenue. anthony and i talked about that on the call. we have a great revenue engine. it was due to our direct response business. those products are new, less than a year old. we know wh we need to do there and i think we'll see improvement. >> twitter shares off 9% today. and a big miss after the bell from yelp the site that lets people review businesses.
it posted a loss revenue missed estimates. outlook also disappointed and that sent shares sharply lower initially after the report. you see it right there falling off the cliff. during the regular trading session, though, the stock closed up fractionally at $51.29. the easiest question sh ask is -- where can i find the lowest price? but the answer can be complicated to courtney reagan and c nbs and personal finance website nerdwallet teamed up to figure it out. how did you conduct your research? >> a nonscientific study but cnbc and nerdwallet looked at 11 consumer electronics prolects at five retail websites every week for 12 weeks and we compared the prices preshipping and pretax so talking just base price here. >> mm-hmm. >> what did the nerds find? >> and so -- >> you excluded of course. >> oh, right, right. what we found is that in this snapshot of time, this 12-week study, best buy and target's
prices were higher than amazon and walmart's prices. however, walmart was out of stock the most often. best buy was out of stock only one time on one product in the final week. costco was the fifth retailer and that wasn't difficult because the products were not consistently listed on the site. some weeks they were there, some weeks not. >> were the price differences large, material? depended. on the tvs you saw a pretty large price variation because that is a higher priced item so, that makes sense. but if you look at the sony playstation iv or the nikon camera we looked at those prices were pretty consistent week to week and retailer to retailer. the retailers' response to us many of them said look we all have price matching policies and programs with the exception of amazon. amazon then pointed out we have third-party sellers. we don't influence their prices so we have lots of prices that you could be looking at. but all of this was publicly available information on the website.
we just really combed through it and carefully looked at it. >> so you could get a price match, but then you had to go through the whole process of trying to get the price match, right? >> you do. you do. >> scan it get the sku. >> or at least somehow prove to the retailer that you have found a lower price on an identical item within a close period of time and that's going to vary from retailer to retailer whether it's seven days a month, online offline, a little different, but doesn't hurt to ask. >> sure. thanks so much. great job. >> thank you. >> to read more about finding lo online head to our website, nbr.com. coming up how technology has helped small businesses do something they once thought was impossible -- sell.
here's a look at what to watch tomorrow. two economic reports released before the bell. jobless claims and personal income and spending and it's the last trading day of the month. that's on the agenda for tomorrow. ben bernanke has a new job. the former chairman of the federal reserve hasn hired by pimco as a senior adviser to that firm. bernanke will provide guidance
on the investment process and meet with clients on occasion.r this month, bern main key joined citadel in an advised rerole. another survey on americans' ability to save. according to northwestern mutual one-third of those surveyed have no financial plan. 58% believe they need time prove their financial planning effort. 43% haven't spoke on the anybody about retirement planning. and 21% of americans are not confident they will reach their financial goals. more small businesses are able to do something they once thought would be impossible -- export. and the decision to expand sales overseas has created ainancial lifeline for some of them. kate rogers has more on the rise of the so-called micromultinationals. >> reporter: exporting has brought dell music, an institution in redwood city california since 1939 back from the brink. the brick-and-mortar took a stab
at selling products overseas seven years ago on ebay amid construction and slowing growth. sales started out small at around $250,000 in year one. today nearly 30% of its business comes from exports. >> it saved the store. we had some slow time at the store, some construction going on sales had dipped. that's when we started putting a lot more products in the ebay and it really saved the store. we did about $750,000 that one year and now with the global sh it that's come about, now we can reach other areas of the world we never would have reached in the first place. so and repeat customer taos. >> reporter: having a global footprint goal for many u.s. small businesses but unfortunately for most it's not a reality. data from the international trade administration shows less than 5% of american small businesses are shipping their goods overseas. now e-commerce platforms are helping small businesses to expand their reach globally breaking down exporting barriers like language differences and
regulations according to a new report from ebay. ebay finds that in 201490% of the small and medium-sized businesses that sell on its site are exporting. more than 190,000 of the businesses reached consumers on four or more continents. in 2009 less than 30,000 were exporting to at least 15 country markets. geld music now has customers all over the globe with repeat customers in unlikely places as far as the middle east. ebay says 80% of its sellers now reach five or more markets. small businesses once struggled to find customers overseas and ran the risk of not getting paid upon exporting. says todd mccracken president of the national small business association. mm platforms like ebay they solve both at once. they're helping you find customers by using their marketing channels and they help assure you get paid by the tools
they have. >> reporter: of course ebay is hardly the only game in town. other e-commerce platforms including amazon and alib abba all boast a global reach but weren't the same. for "nightly business report, i'm kate rogers. >> and to read more about how e-commerce companies are helping small businesses go global head to our website, nbr.com. finally tonight, there was no take me out the to the ball game today at camden yards. the baltimore orioles and the chicago white sox played to what is believed to be the first major league basebl game in front of a completely empty stadium. fans were shut out of camden yards as a precaution following the unrest that broke out with tengs between residents and police on monday. the final score was 8-2 orioles. the game was completed in a very brisk two hours. >> today ice attendance when
they announced that at the top, today's attendance is -- zero. i read that. >> i could have guessed the attendance and maybe won a prize. >> you could have. >> zero. all right. >> so good to have us back together. >> it is. >> that does it for "nightly business rep for tonight. i'm sue herera. thanks for joining us. >> i'm tyler mathisen. than from me as well. have a great evening. see you right back hni
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